Netjoy Holdings Limited — Proxy Solicitation & Information Statement 2002

Nov 27, 2002

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ACTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your stockbroker, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Huaneng Power International, Inc., you should at once hand this circular and the accompanying form of proxy to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

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(A Sino-foreign joint stock limited company incorporated in the People’s Republic of China)

CONNECTED TRANSACTION

Financial Adviser to Huaneng Power International, Inc.

J.P. Morgan Securities (Asia Pacific) Limited

Independent Financial Adviser to the Independent Directors

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CLSA Equity Capital Markets Limited

A letter from the Board of Huaneng Power International, Inc. (the “Company”) is set out on pages 3 to 13 of this circular. A letter from the Independent Directors is set out on page 14 of this circular.

A notice convening an Extraordinary General Meeting of the Company to be held at 9 a.m. on 31st December 2002 at Beijing International Convention Centre at No. 8 Beichen East Road, Chaoyang District, Beijing, the People’s Republic of China has already been sent to the Shareholders of the Company on 16th November 2002 and is set out on pages 25 to 27 of this circular. Whether or not you are able to attend the meeting, you are requested to complete and return the enclosed reply slip and form of proxy in accordance with the instructions printed thereon as soon as possible and in any event the form of proxy should be returned not less than 24 hours before the time appointed for holding such meeting.

Completion and return of the form of proxy shall not preclude you from attending and voting in person at the meeting or at any adjourned meeting should you so wish.

22nd November 2002

Huaneng Power International, Inc.

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
2. Transfer Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
3. Reasons for the Acquisition and Pricing Factors . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
4. Information Regarding the Power Plants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
5. Selected Financial Information of the Target Power Plants . . . . . . . . . . . . . . . . . . .	10
6. Connected Transaction under Shanghai Listing Rules . . . . . . . . . . . . . . . . . . . . . . .	11
7. The EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
8. Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
9. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
Letter from the Independent Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
Letter from CLSA Equity Capital Markets Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	15
Appendix I — General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	23
Notice of Extraordinary General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	25

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Huaneng Power International, Inc.

DEFINITIONS

In this document, unless the context otherwise requires, the following expressions have the following meanings:

“Acquisition” the purchase by the Company of the Huaneng Group Interest; “Arthur Andersen • Hua Qiang” Arthur Andersen • Hua Qiang Certified Public Accountants, PRC qualified accountants; “Associate” the meaning ascribed to it in the Hong Kong Listing Rules; “Closing” the closing of the Acquisition; “CLSA” CLSA Equity Capital Markets Limited; ”Company” Huaneng Power International, Inc.; “Directors” the directors of the Company; “EGM” an extraordinary general meeting of the Company shareholders to be held for shareholders of the Company to consider and approve the Acquisition; “HIPDC” Huaneng International Power Development Corporation; “Hong Kong Listing Rules” the Rules Governing the Listing of Securities on the Hong Kong Stock Exchange; “Huaneng Group” China Huaneng Group; “Huaneng Group Interest” the 30% equity interest in Shanghai Shidongkou First Power Plant and 5% equity interest in Jiangsu Taicang Power Plant, which are expected to be transferred to Huaneng Group pursuant to China’s electricity industry restructuring plan and to be sold to the Company; “Independent Directors” the independent directors of the Company, who are invited to advise the Independent Shareholders in connection with the Acquisition; “Independent Shareholders” shareholders of the Company other than HIPDC and its Associates; “Jiangsu Taicang Power Plant” Suzhou Industrial Park Huaneng Power Limited Liability Company, a company with limited liability incorporated in the PRC; “JPMorgan” J.P. Morgan Securities (Asia Pacific) Limited;

Huaneng Power International, Inc.

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DEFINITIONS

“Latest Practicable Date”	15th November 2002, being the latest practicable date prior to
	the publication of this circular for ascertaining certain
	information referred to in this circular;
“PRC”	the People’s Republic of China;
“Previous Acquisition”	the acquisition by the Company of, amongst other things,
	certain interests in the Target Power Plants, details of which
	were set out in the Company’s announcement dated 9th May
	2002 and circular dated 13th May 2002;
“RMB”	the lawful currency of the PRC;
“SDI Ordinance”	Securities (Disclosure of Interests) Ordinance (Chapter 396 of
	the Laws of Hong Kong);
“Shanghai Listing Rules”	The Listing Rules of Shanghai Stock Exchange;
“Shanghai Shidongkou First	Shanghai Shidongkou Power Limited Company, a company
Power Plant”	with limited liability incorporated in the PRC;
“Stock Exchange”	The Stock Exchange of Hong Kong Limited;
“Target Power Plants”	Shanghai Shidongkou First Power Plant and Jiangsu Taicang
	Power Plant;
“Transfer Agreement”	the transfer agreement dated 15th November 2002 entered
	into by the Company and Huaneng Group relating to the
	purchase of the Huaneng Group Interest; and
“Zhonghua”	Zhonghua Financial and Accounting Consulting Company, a
	qualified assets appraisal firm in China.

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Huaneng Power International, Inc.

LETTER FROM THE BOARD

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(A Sino-foreign joint stock limited company incorporated in the People’s Republic of China)

Directors:

Legal Address:

Li Xiaopeng Xu Zujian West Wing, Building C, Wang Xiaosong Liu Shuyuan Tianyin Mansion, Ye Daji Bai Changnian No. 2C Fuxingmennan Street, Chen Baoliang Shen Weibing Xicheng District, Huang Long Shen Zongmin Beijing 100031, Hu Jianmin People’s Republic of China. Wu Dawei Liu Guoyue Wang Defang Shan Qunying Yang Shengming

Independent Directors:

Gao Zongze Zheng Jianchao Qian Zhongwei

22nd November 2002

To the Shareholders

Dear Sir or Madam,

CONNECTED TRANSACTION

1. INTRODUCTION

On 16th November 2002, the Board of Directors announced that the Company had entered into a Transfer Agreement with Huaneng Group, pursuant to which the Company agreed to acquire the Huaneng Group Interest for a total consideration of RMB415 million. The Acquisition is expected to be funded by the Company’s internal cash reserves. The purchase price for the Acquisition is based on normal commercial terms and was determined through arm’s length negotiation between the Company and Huaneng Group.

Huaneng Power International, Inc.

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LETTER FROM THE BOARD

Huaneng Group is an indirect controlling shareholder of the Company, holding a 51.98% interest in HIPDC. As of the Latest Practicable Date, HIPDC held 2,554,840,000 domestic shares in the Company, representing 42.58% of the total issued share capital (domestic shares and H Shares) of the Company. Accordingly, the Acquisition contemplated by the Transfer Agreement constitutes a connected transaction for the Company within the meaning of the Hong Kong Listing Rules, and is subject to approval by the Independent Shareholders.

The Company and the Independent Directors have reviewed the Acquisition. The Company has appointed JPMorgan as the financial adviser in connection with the Acquisition. The Company has also appointed CLSA as the independent financial adviser to provide opinions to the Independent Directors in connection with the Acquisition.

Please refer to the Company’s announcement dated 9th May 2002 and circular dated 13th May 2002 regarding the Previous Acquisition. The consideration in respect of the Previous Acquisition was RMB2,050 million.

The purpose of this circular is to provide you with further information in relation to the Acquisition and the Transfer Agreement, and to set out the recommendation of the Independent Directors and the Notice of the EGM.

2. TRANSFER AGREEMENT

The Transfer Agreement was approved by the Directors at the board meeting on 15th November 2002 and signed by Huaneng Group and the Company on that day.

Date:	15th November 2002
Parties:	Seller: Huaneng Group
	Purchaser: the Company
Huaneng Group Interest
to be acquired:	(i) Huaneng Group Interest in the registered capital of
	Shanghai Shidongkou First Power Plant; and
	(ii) Huaneng Group Interest in the registered capital of
	Jiangsu Taicang Power Plant.
Consideration:	The consideration for the Acquisition is RMB415 million
	payable in cash on the Closing date. The purchase price for
	the Acquisition was determined on the basis of normal
	commercial terms and arm’s length negotiation between the
	parties thereto. The Acquisition, when aggregated with the
	Previous Acquisition, does not constitute a disclosable
	transaction under the Hong Kong Listing Rules.

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Huaneng Power International, Inc.

LETTER FROM THE BOARD

Conditions:

Closing is subject to the satisfaction or waiver of the following conditions:

• (1) Conditions which need to be satisfied or waived (except for condition (a)) by both parties:

• (a) Huaneng Group has obtained the legal ownership of the Huaneng Group Interest;

• (b) CLSA, the independent financial adviser to the Independent Directors, has advised the Independent Directors that the terms and conditions of the transactions contemplated under the Acquisition are fair and reasonable so far as the Independent Shareholders are concerned;

• (c) the Independent Directors recommended that the shareholders vote in favour of the Acquisition and the Transfer Agreement;

• (d) the Transfer Agreement and the Acquisition have been approved and adopted by the Independent Shareholders;

• (e) the relevant PRC government agencies have no objection to the Acquisition; and

• (f) the Company has obtained all necessary government approvals on the Transfer Agreement and the Acquisition.

• (2) Conditions which the Company may waive under the Transfer Agreement: (a) representations and warranties of Huaneng Group in the Transfer Agreement are true and complete in all material respects; and

• (b) Huaneng Group has fulfilled in all material respects its obligations under the Transfer Agreement.

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Huaneng Power International, Inc.

LETTER FROM THE BOARD

• (3) Conditions which Huaneng Group may waive under the Transfer Agreement:

• (a) representations and warranties of the Company in the Transfer Agreement are true and complete in all material respects; and

• (b) the Company has fulfilled in all material respects its obligations under the Transfer Agreement.

Completion: Closing shall take place on the day agreed upon by both parties, within 30 days after the conditions have been satisfied or waived.

3. REASONS FOR THE ACQUISITION AND PRICING FACTORS

One of the Company’s development strategies is placing equal emphasis on acquiring existing power plants and developing new power plants. Capturing a greater market share in the coastal regions with increasing demand for power will enable the Company to continue its earnings growth. The Acquisition will further increase the Company’s market share in Eastern China, a region with high economic growth and strong demand for power, which is consistent with the Company’s long-term development strategy.

After the completion of the Acquisition, the Company will gain 390 MW of additional net generation capacity, and thus its total net generation capacity will increase to 14,285 MW.

All generation units of the Target Power Plants under the Acquisition are coal-fired units made in the PRC. The average availability factor of the Target Power Plants in 2001 was 93.8%, slightly higher than the Company’s level of 92.18% in 2001. The average utilization hours in 2001 were 6,068 hours for Shanghai Shidongkou First Power Plant and 5,781 hours for Jiangsu Taicang Power Plant, which were higher than the Company’s average actual utilization hours of 5,166 hours in 2001. The total on-grid output of the Target Power Plants in 2001 reached approximately 10.2 billion kWh, out of which the Huaneng Group Interest accounted for approximately 2.2 billion kWh, which is equivalent to 4.1% of the 54.1 billion kWh total on-grid output of the Company in 2001.

The Company believes that the Acquisition will enhance its effective management of the Target Power Plants. After the completion of the Acquisition, the Shanghai Shidongkou First Power Plant will be wholly-owned by the Company and the Company’s interest in the Jiangsu Taicang Power Plant will be increased to 75%. Further, according to the unaudited financial information, the total net profit after taxation of the Shanghai Shidongkou First Power Plant and the Jiangsu Taicang Power Plant for the 9 month period ending on 30th September 2002 is RMB101.45 million and RMB83.42 million, respectively. Profit attributable to the Huaneng Group Interest in respect of the Shanghai Shidongkou First Power Plant and the Jiangsu Taicang Power Plant is RMB30.44 million and RMB4.17 million, respectively. The Acquisition will be beneficial for increasing the Company’s profits in the future.

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Huaneng Power International, Inc.

LETTER FROM THE BOARD

The Acquisition price has been determined through arm’s length negotiations between the two parties and their respective financial advisers, taking into account various factors, including the market environments, the operating conditions of the Target Power Plants, the Target Power Plants’ earnings potentials and their abilities to generate cash flow. The Company has also considered all the appraisal reports provided by Zhonghua. According to the appraisal reports provided by Zhonghua, the value of the Huaneng Group Interest is RMB413 million. According to the financial statements for the year 2001 of each Target Power Plant audited by Arthur Andersen • Hua Qiang, the net assets value (book value) of the Shanghai Shidongkou First Power Plant and the Jiangsu Taicang Power Plant attributable to the Huaneng Group Interest is RMB128.9 million and RMB34.9 million, respectively. The consideration is 153% higher than such net assets values in total. The book value reflected the comparatively low amount of the historical construction costs and has taken into account depreciations of those assets. Whereas, the consideration has reflected the value of the Target Power Plants which can be generated through their future operation.

The board of Directors believes that the Acquisition price and terms are fair and reasonable to the Company and its shareholders. This transaction is consistent with the Company’s long-term business strategy and will benefit the Company and its shareholders.

4. INFORMATION REGARDING THE POWER PLANTS

(1) Overview of the provinces and municipality where the Power Plants are located

The Target Power Plants are located in the affluent Eastern China region. The Eastern China Power Grid is one of the largest inter-provincial grids in the PRC in terms of installed capacity. By the end of 2000, the installed capacity of the three provinces and one municipality in Eastern China (Jiangsu Province, Zhejiang Province, Anhui Province and Shanghai Municipality) reached approximately 56,663 MW. In 2000, the power consumption of these three provinces and one municipality reached approximately 260.8 billion kWh, representing an increase of 14.7% over that in 1999. A summary of the power market conditions in Shanghai Municipality and Jiangsu Province where the Target Power Plants are located is as follows:

Shanghai Municipality

Shanghai Municipality holds the leading position in China’s industrial, business and financial services sectors. The development of the Pudong Development Area during the past ten years has further strengthened Shanghai’s leading position in the Yangtse River delta. In 2000, Shanghai had a population of approximately 16.74 million. In 2001, Shanghai’s GDP reached RMB495.1 billion and the average annual GDP growth rate over the past ten years from 1992 to 2001 has exceeded 10%.

By the end of 2000, the installed capacity in Shanghai Municipality reached approximately 10,604 MW. In 2000, the power consumption of Shanghai Municipality reached approximately 55.94 billion kWh, representing an increase of 11.6% over that in 1999.

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Huaneng Power International, Inc.

LETTER FROM THE BOARD

Jiangsu Province

Jiangsu Province is one of the most affluent provinces in the PRC. By the end of 2000, Jiangsu Province had a population of approximately 74.38 million in an area of 102,600 sq.km., and it is the most densely populated province in the PRC. In 2001, Jiangsu Province’s GDP reached RMB951.5 billion and it maintains being one of the highest annual growth rates of Gross Domestic Product in the PRC over the past ten years.

By the end of year 2000, the installed capacity in Jiangsu Province reached approximately 19,252 MW. In 2000, the power consumption in Jiangsu Province reached approximately 97.13 billion kWh, representing an increase of 14.6% over that in 1999.

(2) Description of the Target Power Plants

(The power tariffs mentioned below do not include value-added tax)

Shanghai Shidongkou First Power Plant

Shanghai Shidongkou First Power Plant is located in the northern region of the Shanghai Power Grid. It has a total installed capacity of 1,200 MW and was a major energy infrastructure construction project of the PRC during the Seventh Five Year Plan period. It is the first harbour side power plant which has an installed capacity exceeding 1,000 MW within the Shanghai Power Grid. The plant comprises 4 X 300 MW domestic coal-fired generation units, which commenced operation in February 1988, December 1988, September 1989 and May 1990 respectively, and has an economic life of 15 years. Details of the analysis of the economic life of the power plant are set out in the 2001 financial statements audited by Arthur Andersen • Hua Qiang. At present, the four generation units are operating normally. The plant generated a total volume of electricity of 7.28 billion kWh in the year 2001 and its internal consumption rate was 5.9%. The power plant’s power tariff was determined in accordance with the approval granted by the Shanghai Municipal Pricing Bureau.

Huaneng Group originally owned 70% interest in Shanghai Shidongkou First Power Plant. According to a transfer agreement between the Company and Huaneng Group dated 9th May 2002, Huaneng Group transferred its 70% interest in Shanghai Shidongkou First Power Plant to the Company (for details, please see the announcement made by the Company on 10th May 2002 and the circular issued by the Company on 13th May 2002). Such transfer was completed on 1st July 2002.

The remaining 30% interest is held by Shanghai Municipal Power Corporation which is expected to be transferred to Huaneng Group pursuant to China’s electricity industry restructuring plan. Upon Closing, Shanghai Shidongkou First Power Plant will be wholly owned by the Company. According to the Company Law of the PRC, except for those wholly owned by the State, limited liability companies shall have two or more than two shareholders. As such, after completion of the Acquisition, the Company will cancel Shanghai Shidongkou First Power Plant’s independent legal person status.

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Huaneng Power International, Inc.

LETTER FROM THE BOARD

Jiangsu Taicang Power Plant

Jiangsu Taicang Power Plant is located in the most affluent area in the vicinity of Suzhou, Wuxi and Changzhou, and has a total installed capacity of 600 MW. Jiangsu Taicang Power Plant is an ancillary facility of the China-Singapore Suzhou Industrial Park. Jiangsu Taicang Power Plant comprises 2 X 300 MW domestic coal-fired generation units, which commenced operation in December 1999 and April 2000 respectively, and has an economic life of 15 years. Details of the analysis of the economic life of the power plant are set out in the 2001 financial statements audited by Arthur Andersen • Hua Qiang. At present, the two generation units are operating normally. The plant generated a total volume of electricity of 3.47 billion kWh in year 2001 and its internal consumption rate was 4.8%. The power plant’s power tariff was determined in accordance with the approval given by the Jiangsu Provincial Pricing Bureau.

Huaneng Group originally owned 70% interest in Jiangsu Taicang Power Plant. According to a transfer agreement between the Company and Huaneng Group dated 9th May 2002, Huaneng Group transferred its 70% interest in Taicang Power Plant to the Company (for details, please see the announcement made by the Company on 10th May 2002 and the circular issued by the Company on 13th May 2002). Such transfer was completed on 1st July 2002. At present, the other owners of Jiangsu Taicang Power Plant are Suzhou Industrial Park Company Limited, China-Singapore Suzhou Industrial Park Development Company, Jiangsu Provincial Power Company, Jiangsu International Trust and Asset Management Group Limited and Taicang Energy Development Company, which are holding 10%, 6%, 5%, 5% and 4% interest, respectively. The 5% equity interest owned by Jiangsu Provincial Power Company mentioned above is expected to be transferred to Huaneng Group pursuant to China’s electricity industry restructuring plan.

Upon Closing, the Company will hold 75% interest in Jiangsu Taicang Power Plant.

The following table sets out certain operating data of the Target Power Plants for 2001:

	Shanghai	Jiangsu
	Shidongkou First	Taicang
	Power Plant	Power Plant
Installed capacity (MW)	1,200	600
Generation volume (billion kWh)	7.28	3.47
Utilisation hours (hours)	6,068	5,781
Availability factor (%)	92.3%	96.8%
Internal consumption rate (%)	5.9%	4.8%
Weighted average on-grid power tariff (RMB/MWh)	224	287
Coal consumption rate for power sold (grams/kWh)	358	338
Unit fuel cost for power sold (RMB/MWh)	106	101

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Huaneng Power International, Inc.

LETTER FROM THE BOARD

5. SELECTED FINANCIAL INFORMATION OF THE TARGET POWER PLANTS

The following is a summary of the financial information of the Target Power Plants for the year ended 31st December 2001. The financial information has been extracted from the financial statements of the Target Power Plants audited by Arthur Andersen • Hua Qiang:

	Shanghai	Jiangsu
	Shidongkou First	Taicang
	Power Plant	Power Plant
	_(RMB in millions, _	except percentage)
Total assets:	1,264.9	2,507.4
Cash and bank deposits	127.3	91.7
Total accounts receivable	171.6	222.3
Total liabilities:	835.2	1,809.0
Borrowings	790.1	1,660.7
Net assets	429.7	698.4
Revenue from principal business	1,532.6	949.2
Depreciation cost	202.2	168.9
Profit from principal business	316.7	356.4
Applicable tax rate	33%	33%
Net profit:	130.4	169.0
Huaneng Group Interest	30%	5%
Net assets attributable to Huaneng Group Interest
according to the above ratio	128.9	34.9

The audited financial statements of the Power Plants have been prepared based on the applicable accounting standards and regulations in the PRC (“PRC GAAP”), which differs in certain material respects from International Financial Reporting Standards (“IAS”). The Directors estimate that the significant unaudited IAS adjustments to the income statement would include the following:

• (a) Under PRC GAAP, the operating costs and interest expenses incurred during the six-month trial production period were capitalized as part of the construction costs of the generators constructed in previous years. Depreciation was provided starting from the month following the completion of the trial production period. Under IAS, depreciation should be provided when the generators were ready for use (i.e. upon completion) and all expenses incurred (including interest expenses) should be charged to the income statement thereafter. For the year ended 31st December 2001, depreciation expense charged to the income statement under IAS was lower than that charged under PRC GAAP.

• (b) The Power Plants have sold staff quarters to its employees at preferential prices. The cost of such housing benefits represented the difference between the net book value of the staff quarters sold and the proceeds collected from the employees. Under PRC GAAP, in accordance with the relevant regulations issued by the Ministry of Finance, costs relating to a housing benefits scheme approved by the government before 6th September 2000 were

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Huaneng Power International, Inc.

LETTER FROM THE BOARD

charged to opening retained earnings as of 1st January 2001, while those approved after 6th September 2000 were charged to non-operating expenses as incurred. Under IAS, the costs are recognised on a straight-line basis over the estimated remaining average service life of the employees. Under PRC GAAP, a substantial portion of the cost of housing benefits were charged to opening retained earnings as of 1st January 2001, whereas under IAS such costs were amortised in 2001. Accordingly, for the year ended 31st December 2001, the cost of housing benefits charged to the income statement under IAS was higher than that charged under PRC GAAP.

• (c) Under PRC GAAP, the impact of deferred taxation is not recorded. Under IAS, deferred taxation is provided, using the liability method, on all significant timing differences. For the year ended 31st December 2001, taxation charged to the income statement under IAS was more than that charged under PRC GAAP.

Reconciliation between PRC GAAP and IAS (for the year ended 31st December 2001):

Shanghai Shidongkou First Power Plant Jiangsu Taicang Power Plant (RMB in millions) Net profit under PRC GAAP 130.4 169.0 (a) Depreciation charges 36.1 — (b) Housing benefits (0.6) (5.4) (c) Deferred tax charges (0.4) (4.2) Net profit under IAS 165.5 159.4	Total 299.4 36.1 (6.0) (4.6) 324.9

Taking into consideration the major IAS adjustments, the unaudited net profit after taxation under IAS of Shanghai Shidongkou First Power Plant and Jiangsu Taicang Power Plant for the year ended 31st December 2001 were estimated to be approximately RMB165.5 million and RMB159.4 million respectively. The aggregate amount of the unaudited net profit after taxation under IAS of the Target Power Plants for the year ended 31st December 2001 was estimated to be approximately RMB324.9 million, representing approximately 9% increase in the aggregate amount of net profit after taxation under PRC GAAP.

6. CONNECTED TRANSACTION UNDER SHANGHAI LISTING RULES

As the domestic public shares of the Company are listed on the Shanghai Stock Exchange, the Company is required, in addition to the Hong Kong Listing Rules, to comply with the Shanghai Listing Rules.

The Acquisition constitutes a connected transaction under the Shanghai Listing Rules, which shall be subject to the approval of the Company’s shareholders. The connected persons (as defined under the Shanghai Listing Rules) shall abstain from voting on resolutions related to the Shanghai Connected Transactions.

Huaneng Power International, Inc.

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LETTER FROM THE BOARD

In accordance with Rule 7.3.11(9) and Rule 7.3.12 of the Shanghai Listing Rules, the Company has appointed Beijing H&J Vanguard Consulting Limited (“Hejun”) as the PRC independent financial advisor in respect of the Acquisition.

Upon careful and necessary enquiry, Hejun is of the view that the Acquisition has met the relevant legal requirements under the Company Law of the PRC, the Securities Law of the PRC and the Shanghai Listing Rules (as amended in 2001) and the requirements of the articles of association of the Company. Hejun is of the view that the relevant legal procedures and disclosure requirements have been followed and met, reflecting the principles of equality, justice and reasonableness; and the Acquisition will not in any way affect the interests of either the Company or the non-connected shareholders.

The Independent Directors are of the view that (1) the board of Directors has met the relevant requirements of Shanghai Listing Rules and the articles of association of the Company regarding approval of the relevant resolutions of the Acquisition; and (2) the Acquisition is fair to the Company’s shareholders.

7. THE EGM

The Company will convene an EGM at 9 a.m. on 31st December 2002 at Beijing International Convention Centre at No. 8 Beichen East Road, Chaoyang District, Beijing, PRC to consider the approval of the Acquisition (including the Transfer Agreement). Huaneng Group and its Associates will abstain from voting in the EGM in respect of the ordinary resolution to approve the Acquisition (including the Transfer Agreement). Notice of the EGM is set out on pages 25 to 27 in this circular.

A reply slip and a form of proxy for use by the Independent Shareholders at the Extraordinary General Meeting is enclosed with this circular. Whether or not you intend to attend the meeting in person, you are requested to complete and return the reply slip in accordance with the instructions printed thereon to the registered office of the Company at West Wing, Building C, Tianyin Mansion, 2C, Fuxingmennan Street, Xichang District, Beijing, PRC as soon as possible but in any event by 11th December 2002. The enclosed form of proxy should be completed and returned to the Company’s H Share Registrar, Hong Kong Registrars Limited, at Room 1901-5, 19/F, Hopewell Centre, 183 Queen’s Road East, Hong Kong or the registered office of the Company in accordance with the instructions printed thereon as soon as practicable and in any event by not later than 24 hours before the time appointed for the holding of the EGM. Completion and return of the form of proxy will not preclude you from attending and voting in person at the meeting should you so wish.

8. RECOMMENDATION

According to the requirements of the Hong Kong Listing Rules, the Independent Directors will advise the Independent Shareholders in connection with the Acquisition (including the Transfer Agreement). CLSA has been appointed as an independent financial adviser to advise the Independent Directors with respect to the fairness and reasonableness of the Acquisition (including the Transfer Agreement).

Huaneng Power International, Inc.

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LETTER FROM THE BOARD

The Independent Directors, having taken into account the advice of CLSA, consider the terms of the Transfer Agreement to be fair and reasonable insofar as the Independent Shareholders are concerned and consider the transaction contemplated by the Transfer Agreement to be in the interests of the Company and its shareholders. Accordingly, the Independent Directors recommend that the Independent Shareholders vote in favour of the resolutions to approve the Acquisition and the Transfer Agreement at the Extraordinary General Meeting.

9. OTHER INFORMATION

Your attention is also drawn to the letter from the Independent Directors and the letter from CLSA, which sets out its advice to the Independent Directors, and the additional information set out in the appendices of this circular.

Yours faithfully, For and on behalf of Huaneng Power International, Inc. Wang Xiaosong Vice Chairman

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Huaneng Power International, Inc.

LETTER FROM THE INDEPENDENT DIRECTORS

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(A Sino-foreign joint stock limited company incorporated in the People’s Republic of China)

Registered office: West Wing, Building C Tianyin Mansion 2C Fuxingmennan Street Xicheng District Beijing 100031 The People’s Republic of China

22nd November 2002

To the Independent Shareholders

Dear Sir or Madam,

CONNECTED TRANSACTION

We, the Independent Directors of Huaneng Power International, Inc., are advising the Independent Shareholders in connection with the Acquisition, details of which are set out in the letter from the Board contained in the circular (“Circular”) of the Company to the Shareholders dated 22nd November 2002, of which this letter forms a part. Terms defined in the Circular shall have the same meanings when used herein unless the context otherwise requires.

Under the Hong Kong Listing Rules, the Acquisition and the Transfer Agreement constitute connected transactions for the Company. Accordingly, the Acquisition and the Transfer Agreement will require the approval of the Independent Shareholders at the Extraordinary General Meeting.

We wish to draw your attention to the letter of advice from CLSA set out on pages 15 to 22 of the Circular. We have discussed the letter and the opinion contained in it with CLSA.

We have also considered the opinion of Beijing H&J Vanguard Consulting Limited with respect to the Acquisition.

Having considered, inter alia, the factors and reasons considered by, and the opinion of, CLSA, as stated in its aforementioned letter, we consider the Acquisition and the Transfer Agreement to be fair and reasonable so far as the Independent Shareholders are concerned. Accordingly, we recommend that the Independent Shareholders vote in favour of the ordinary resolutions in the Notice of Extraordinary General Meeting set out at the end of the Circular to be proposed at the Extraordinary General Meeting to be held on 31st December 2002 and thereby approve the Acquisition and the Transfer Agreement.

Yours faithfully, Gao Zongze Zheng Jianchao Qian Zhongwei Independent Directors

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Huaneng Power International, Inc.

LETTER FROM CLSA EQUITY CAPITAL MARKETS LIMITED

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ASIA • LATIN AMERICA • EMERGING EUROPE • MIDDLE EAST • AFRICA

22nd November 2002

To the Independent Directors of

Huaneng Power International, Inc.

Dear Sirs,

CONNECTED TRANSACTION

We refer to our engagement under which CLSA Equity Capital Markets Limited (“CLSA”) has been appointed to advise the Independent Directors in connection with the terms of the Acquisition. Pursuant to the Listing Rules, the Acquisition constitutes a connected transaction for the Company and is subject to the approval of the Independent Shareholders at a general meeting. Details of the Acquisition are set out in the letter from the Board included in the circular dated 22nd November 2002 (the “Circular”) issued by the Company to its shareholders (“Shareholders” and individually each a “Shareholder”). This letter has been prepared for inclusion in the Circular and terms used in this letter have the same meanings as defined in the Circular unless the context otherwise requires.

In our capacity as independent financial adviser to the Independent Directors, our role is to give an independent opinion as to whether the terms of the Acquisition are fair and reasonable insofar as the Independent Shareholders are concerned. Our opinion letter to the Independent Directors has been prepared and delivered in accordance with the requirements of the Listing Rules for the purposes of assisting the Independent Directors in their duties to evaluate the terms of the Acquisition and for no other reason. The assumptions made and the analysis conducted in our letter were undertaken in accordance with the customs and practices employed in similar transactions in Hong Kong.

In formulating our opinion, we have relied on the information, opinions and facts supplied, and representations made to us, by the Directors and representatives of the Company (including those contained or referred to in the Circular) and have assumed that all such information, opinions, facts and representations, which have been provided by the Directors and such representatives, and for which they are wholly responsible, are true and accurate in all respects. We have also relied on certain information available to the public and we have assumed such information to be accurate and reliable, and we have not independently verified the accuracy of such information. Further, we have relied on the representations of the Directors that they have made all reasonable inquiries, and to the best of their knowledge and belief, that there are no other facts, the omission of which would make any statement contained in the Circular untrue or misleading. We have also assumed that statements and representations made or referred to in the Circular were accurate at the time they were made and continue to be accurate at the date of despatch of the Circular.

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Huaneng Power International, Inc.

LETTER FROM CLSA EQUITY CAPITAL MARKETS LIMITED

We consider that we have reviewed sufficient information to enable us to reach an informed view and to justify relying on the accuracy of the information provided in the Circular as well as to provide a reasonable basis for our advice. We have not, however, made any independent evaluation or appraisal of, nor have we conducted any form of independent investigation into, the business affairs or assets and liabilities of the Target Power Plants or the Company. Additionally, we did not conduct any physical inspection of the properties or facilities of the Target Power Plants or the Company. It is not within our terms of reference to comment on the commercial feasibility of the Acquisition, which remains the responsibility of the Directors. As the independent financial adviser to the Independent Directors, we have not been involved in the negotiations in respect of the terms of the Acquisition. Our opinion with regard to the terms thereof has been made on the assumption that all obligations to be performed by each of the parties to the Acquisition will be fully performed in accordance with the terms thereof.

Our opinion is necessarily based upon market, economic and other conditions as they existed and could be evaluated on, and on the information publicly available to us as of the date of the opinion. We have no obligation to update this opinion to take into account events occurring after the date that this opinion is delivered to the Independent Directors. As a result, circumstances could develop prior to completion of the Acquisition that, if known at the time we rendered our opinion, would have altered our opinion.

CLSA is a registered investment adviser under the Securities Ordinance (Chapter 333 of the laws of Hong Kong) and together with its affiliates provide a full range of investment banking and broking services, which, in the course of normal trading activities, may from time to time effect transactions and hold securities, including derivative securities, of the Company for our own account and the accounts of customers. We will receive a fee from the Company for rendering this opinion. The Company has also agreed to indemnify CLSA and certain related persons against certain liabilities and expenses in connection with this engagement.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion with regard to the terms of the Acquisition, we have considered the principal factors and reasons set out below. None of these factors or reasons considered by us was assigned a greater significance than any other. We did not form a conclusion as to whether any individual factors or reasons, considered in isolation, supported or failed to support our opinion, although we are not aware of any matter which would have rendered our opinion differently by the results of our analyses of any such individual factors or reasons. Rather, in reaching our conclusion, we have considered the results of the analyses in light of each other and ultimately reached our opinion based on the results of all analyses taken as a whole.

1. The Transfer Agreement

On 16th November 2002, the Directors announced that the Company had entered into the Transfer Agreement, pursuant to which, the Company agreed to acquire from Huaneng Group its 30% interest in Shanghai Shidongkou First Power Plant and 5% interest in Jiangsu Taicang Power Plant, for a consideration of RMB415 million (approximately HK$391million), which is payable in cash on completion of the Acquisition.

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Huaneng Power International, Inc.

LETTER FROM CLSA EQUITY CAPITAL MARKETS LIMITED

Details of the Acquisition are set out in the letter from the Board contained in the Circular.

2. Reasons for the Acquisition

The Target Power Plants are located in the coastal regions of Shanghai Municipality and Jiangsu Province respectively. The Directors believe that the Acquisition will further increase the Company’s market share in Eastern China, which is a region with high economical growth and strong demand for power. The Directors believe the Acquisition is consistent with the Company’s long-term development strategy. After the completion of the Acquisition, the total net installed capacity of the Company will increase to 14,285MW, representing an increase of 390MW.

For further details of the reasons for the Acquisition, please refer to the letter from the Board contained in the Circular.

3. Interest to be acquired

Set out below are certain financial information of the Target Power Plants extracted from the audited financial statements of the Target Power Plants as at 31st December 2001 prepared under PRC GAAP and after taking into account the unaudited adjustments in order to comply with IAS.

In RMB million unless stated otherwise

						Equity
				Book	Installed	Interest
			Net	Value of	Capacity	to be
	Location	Sales	Profit	Equity	(MW)	acquired
Shanghai Shidongkou	Shanghai	1,532.6	165.5	312.4	1,200.0	30%
First Power Plant	Municipality
Jiangsu Taicang	Jiangsu	949.2	159.4	750.7	600.0	5%
Power Plant	Province

We have also considered the unaudited management accounts of the Target Power Plants for the nine-month period ended 30th September 2002 as supplied to us by the Directors of the Company. We noted that the net profits of Shanghai Shidongkou First Power Plant and Jiangsu Taicang Power Plant for the 2002 nine-month period were Rmb101.45 million and Rmb83.42 million respectively under PRC GAAP, which compare to Rmb130.37 million and Rmb169.01 million respectively under PRC GAAP for the full year 2001. We understand from the Directors that the net profit of Jiangsu Taicang Power Plant for the 2002 nine-month period was adversely affected by, inter-alia, a non-operating expense of Rmb43.94 million which relates to the losses incurred in the sale of staff quarters to employees, and which is considered a non-recurring extra-ordinary expense by the Directors.

Further details relating to the Target Power Plants are set out in the letter from the Board in the Circular.

Huaneng Power International, Inc.

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LETTER FROM CLSA EQUITY CAPITAL MARKETS LIMITED

4. Funding of the Acquisition

The consideration for the Acquisition will be funded by internal resources of the Company.

As disclosed in the financial statements as at 30th June 2002, the Company had total cash and cash equivalent resources of approximately RMB4,791 million, and its long term and short term debts were approximately RMB10,785 million, representing a net debt to equity ratio of approximately 21%. The Directors believe the Company will have sufficient resources for future working capital purposes after the Acquisition.

5. Consideration and valuation

The consideration was determined through arm’s length negotiations and based on normal commercial terms between the parties thereto, after taking into account the appraisal conducted by Zhonghua, an independent appraiser qualified in the PRC.

According to the audited accounts under PRC GAAP and the unaudited adjustments to comply with IAS, the net book value of the Huaneng Group Interest as at 31st December 2001 was RMB163.8 million in accordance with PRC GAAP and RMB131.3 million in accordance with IAS. The consideration for the acquisition of the Huaneng Group Interest of RMB415 million (approximately HK$391 million) represents approximately a premium of 153% and 216% to the net book value under PRC GAAP and IAS respectively. Under PRC GAAP, the Acquisition price represents 8.7 times of 2001 earnings attributable to the Huaneng Group Interest and implies a ratio of 4.1 of enterprise value to 2001 EBITDA attributable to the Huaneng Group Interest. Taking into account the unaudited adjustements to comply with IAS, the Acquisition price represents 7.2 times of 2001 earnings attributed to the Huaneng Group Interest and implies an enterprise value to 2001 EBITDA ratio of 4.2.

In formulating our opinion, we have considered the current market multiples of various comparable and listed companies based in the PRC and other Asian countries based on their respective market price as at the Latest Practicable Date and their latest available full year financial statements.

Set out below are certain details of the comparable listed companies that are engaged in the power generation business.

For the purpose of comparison only, we have considered various measures including:

• the enterprise value to net sales ratio,

• the enterprise value to EBITDA ratio,

• the enterprise value to EBIT ratio,

• the price to earnings ratio,

• the price to book value of equity ratio,

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Huaneng Power International, Inc.

LETTER FROM CLSA EQUITY CAPITAL MARKETS LIMITED

• the price to cash flow ratio,

• the enterprise value per MW ratio,

based on publicly available data as at the Latest Practicable Date and the listed companies’ latest available full year financial statements.

Country PRC H share Beijing Datang Power Generation Co. Ltd PRC Huaneng Power Int’l Inc. PRC Shangdong Int’l Power Development Co. Ltd. PRC Average PRC B share Shenzhen Nanshan Power Station Co. Ltd PRC Heilongjiang Electric Power Co. Ltd PRC Zhejiang Southeast Electric Power Co. Ltd PRC Guangdong Electric Power Development Co. Ltd PRC Average Hong Kong CLP Holdings Ltd Hong Kong Hong Kong Electric Holdings Ltd Hong Kong Average	Enterprise Value/ Net Sales X 2.6 2.8 2.3	Enterprise Value/ EBITDA X 5.4 5.3 4.6	Enterprise Value/ EBIT X 8.2 8.8 6.4	Price/ Earnings Price/ Book Value of Equity X X 9.9 1.0 11.4 1.4 7.0 1.2	Price/ Earnings Price/ Book Value of Equity X X 9.9 1.0 11.4 1.4 7.0 1.2	Price/ Cash Flow Enterprise Value/ MW X (US$’000/ MW) 5.7 417.5 5.9 493.1 4.0 400.5	Price/ Cash Flow Enterprise Value/ MW X (US$’000/ MW) 5.7 417.5 5.9 493.1 4.0 400.5
	2.6 2.3 3.7 3.0 2.6 2.9 3.3 7.4	5.1 6.9 9.2 7.0 4.7 7.0 7.6 8.9	7.8 9.3 13.6 10.3 6.2	9.5 13.1 18.0 14.1 10.7 14.0 10.5 10.2	1.2 2.5 1.6 1.8 1.7 1.9 2.2 2.0	5.2 8.8 11.6 8.6 6.4 8.9 9.6 8.2	437.0 608.0 453.9 743.0 565.0
			9.9 8.1 10.8				592.4 N/M N/M
	5.3	8.2	9.4	10.3	2.1	8.9	N/M

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Huaneng Power International, Inc.

LETTER FROM CLSA EQUITY CAPITAL MARKETS LIMITED

Country Other Asian Countries Malakoff Berhad Malaysia Powertek Berhad Malaysia YTL Power Int’l Berhad Malaysia Manila Electric Company Philippines Electricity Generating Public Co. Ltd Thailand Ratchaburi Electricity Generating Holding Public Co Ltd Thailand Korea Electric Power Corp. South Korea Average Overall Sample Average Huaneng Group Interest	Enterprise Value/ Net Sales X 3.6 4.8 4.1 0.3 4.0 2.1 1.9 3.0 3.2 1.4	Enterprise Value/ EBITDA X 6.2 8.8 6.8 4.5 5.4 6.7 4.4 6.1 6.4 4.2	Enterprise Value/ EBIT X 7.5 11.1 8.1 9.2 7.4 8.7 9.7	Price/ Earnings Price/ Book Value of Equity X X 10.9 1.6 11.6 2.3 14.4 1.6 10.0 0.2 6.6 1.0 8.2 1.3 7.4 0.4 9.9 1.2 10.9 1.5 7.2 3.2	Price/ Cash Flow Enterprise Value/ MW X (US$’000/ MW) 7.3 600.3 8.2 501.3 11.2 501.6 2.3 N/M 3.8 460.8 5.9 232.4 1.9 631.4 5.8 488.0 6.8 508.4 3.6 214.4	Price/ Cash Flow Enterprise Value/ MW X (US$’000/ MW) 7.3 600.3 8.2 501.3 11.2 501.6 2.3 N/M 3.8 460.8 5.9 232.4 1.9 631.4 5.8 488.0 6.8 508.4 3.6 214.4
			8.8 9.0 6.4			488.0 508.4 214.4

Source: Bloomberg and annual reports of the respective companies

Notes:

For the purpose of comparison only:

• (1) The ratios were calculated on the basis of the companies’ respective market capitalisation determined as according to Bloomberg as at the Latest Practicable Date and the companies’ financial data as at the end of financial year 2001 as according to Bloomberg and the companies’ respective annual reports.

• (2) Price refers to market capitalisation as at the Latest Practicable Date.

• (3) Enterprise Value refers to the sum of market capitalisation as at the Latest Practicable Date and net indebtedness as at the end of financial year 2001.

• (4) Earnings refer to net profit excluding extraordinary items as according to the finanical statements for financial year 2001.

• (5) EBITDA refers to the earnings before interest, tax, amortisation and depreciation expenses as according to the finanical statements for financial year 2001.

• (6) EBIT refers to the earnings before interest and tax as according to the financial statements for financial year 2001.

• (7) Cash Flow refers to the sum of net profit and amortisation and depreciation expenses as according to the finanical statements for financial year 2001.

— 20 —

Huaneng Power International, Inc.

LETTER FROM CLSA EQUITY CAPITAL MARKETS LIMITED

• (8) MW refers to the announced or installed capacity in megawatt of the respective companies.

• (9) We have derived the implied valuation multiples of the Huaneng Group Interest on the basis of the consideration and the audited financial statements of the Target Power Plants as at 31st December 2001 prepared in accordance with PRC GAAP and after taking into account the unaudited adjustments in order to comply with IAS.

• (10) The country and regional averages are included for the convenience of the reader only and do not necessarily represent the actual country and regional averages if other power generation companies are included.

• (11) N/M means “not meaningful”.

• (12) An exchange rate of RMB8.3=US$1.0 has been used.

• (13) An exchange rate of HK$7.8=US$1.0 has been used.

• (14) An exchange rate of Malaysian Ringgit 3.8=US$1.0 has been used.

• (15) An exchange rate of Philippines Peso 53.4=US$1.0 has been used

• (16) An exchange rate of Thai Baht 43.5=US$1.0 has been used.

• (17) An exchange rate of Korean Won 1,208.5=US$1.0 has been used.

As indicated earlier, the consideration for the Acquisition represents approximately 2.5 times and 3.2 times of the book value of Huaneng Group Interest as at 31st December 2001 under PRC GAAP and IAS respectively. As stated in the letter from the Board contained in the Circular, the book value reflected the comparatively low amount of the historical costs of construction and has taken into account depreciation of those assets, whereas the consideration reflects the value of the Target Power Plants which can be generated by their operation. The book value of Huaneng Group Interest is stated net of the attributable portion of the debts of the Target Power Plants, which, after netting of the attributable portion of cash and bank deposit, amounted to approximately Rmb277 million as at 31st December 2001 under PRC GAAP. Save for this price to book value of equity multiple, the consideration for the Acquisition as multiples to the other measures set out in the above table is within the ranges of the multiples of the comparable companies set out in the table. However, because of the inherent differences between the businesses, operations and prospects of the Target Power Plants and those of the companies included in the comparable companies group, the market multiples comparison above should be used with care.

Having considered the above-mentioned principal factors (items 1 to 5), we are of the opinion that the transactions contemplated under the Acquisition are fair and reasonable so far as the Independent Shareholders are concerned.

Huaneng Power International, Inc.

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LETTER FROM CLSA EQUITY CAPITAL MARKETS LIMITED

OPINION

Having considered the above-mentioned principal factors, we are of the opinion that the terms of the Acquisition are fair and reasonable so far as the Independent Shareholders are concerned and the transactions contemplated thereunder are in the interest of the Company as a whole.

Yours faithfully For and on behalf of

CLSA Equity Capital Markets Limited William Yeung

Managing Director

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Huaneng Power International, Inc.

GENERAL INFORMATION

APPENDIX I

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Hong Kong Listing Rules for the purpose of giving information with regard to the Company. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief there are no other facts the omission of which would make any statement herein misleading.

2. DISCLOSURE OF INTERESTS

• (a) As at the Latest Practicable Date, none of the Directors or Supervisors had any interest in the securities of the Company or any associated corporation (within the meaning of the SDI Ordinance) which (i) would be required to be notified to the Company and the Stock Exchange pursuant to section 28 of the SDI Ordinance (including interests which a Director or Supervisor would be taken or deemed to have under section 31, or Part I of the schedule to, the SDI Ordinance); or (ii) would be required to be entered in the register kept by the Company pursuant to section 29 of the SDI Ordinance; or (iii) would be required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies.

• (b) As at the Latest Practicable Date, HIPDC held 2,554,840,000 Domestic Shares, representing approximately 42.58% of the total issued share capital (both domestic shares and foreign shares) of the Company. Apart from HIPDC and Huaneng Group which holds 51.98% of the equity interest in HIPDC, so far as is known to the Directors or Supervisors, as at the Latest Practicable Date, there was no other person who was interested, directly or indirectly, in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of the Company.

• (c) None of the Directors or Supervisors is materially interested in any contract or arrangement subsisting at the date of this circular which is significant in relation to the business of the Company.

• (d) As at the Latest Practicable Date, none of the Directors or Supervisors had entered, or proposed to enter, into a service contract with the Company which is not determinable by the Company within one year without payment of compensation, other than statutory compensation.

• (e) As at the Latest Practicable Date, CLSA does not have any shareholding in the Company or any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in the Company.

• (f) As at the Latest Practicable Date, none of the Directors or Supervisors nor CLSA had any direct or indirect interest in any asset which had been acquired, or disposed of by, or leased to the Company, or was proposed to be acquired, or disposed of by, or leased to the Company, since 31st December 2001, the date to which the latest published financial statements of the Company and its subsidiaries were made up.

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Huaneng Power International, Inc.

GENERAL INFORMATION

APPENDIX I

3. MATERIAL ADVERSE CHANGE

The Directors are not aware of any material adverse change in the financial or trading position of the Company since 31st December 2001, the date to which the latest published audited financial statements of the Company and of its subsidiaries were made up.

4. CONSENT

CLSA has given and has not withdrawn its written consent to the issue of this circular with the inclusion of and references to its name and letter or report (as the case may be), in the form and context in which they appear.

5. MISCELLANEOUS

• (1) The legal address of the Company is at West Wing, Building C, Tianyin Mansion, 2C Fuxingmennan Street, Xicheng District, Beijing, The People’s Republic of China.

• (2) The share registrar of the Company in Hong Kong is Hong Kong Registrars Limited at Room 1901-5, 19/F, Hopewell Centre, 183 Queen’s Road East, Hong Kong.

• (3) The secretary of the Company is Mr. Huang Long.

• (4) The following is the qualification of the expert who has given an opinion or advice which is contained in this circular:

CLSA: Registered investment adviser

6. DOCUMENTS FOR INSPECTION

Copies of the following documents will be available for inspection at the offices of Herbert Smith at 23rd Floor, Gloucester Tower, 11 Pedder Street, Hong Kong during normal business hours on any day (except public holidays) up to and including 30th December 2002:

• (1) the Transfer Agreement;

• (2) the letter from the Independent Directors as set out in this circular;

• (3) the letter from CLSA as set out in this circular;

• (4) the written consent referred to in paragraph 4 of this appendix;

• (5) the annual report of the Company for the year ended 31st December 2001; and

• (6) the articles of association of the Company.

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Huaneng Power International, Inc.

NOTICE OF EXTRAORDINARY GENERAL MEETING

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(A Sino-foreign joint stock limited company incorporated in the People’s Republic of China)

Notice is hereby given that an extraordinary general meeting of Huaneng Power International, Inc. (the “Company”) will be held at 9 a.m. on 31st December 2002 (Tuesday) at Beijing International Convention Centre at No. 8 Beichen East Road, Chaoyang District, Beijing, The People’s Republic of China, for the purpose of considering and, if thought fit, passing the following ordinary resolution:

Ordinary resolution:

“The terms of the Transfer Agreement (as defined in the announcement made by the Company dated 16th November 2002) entered into by the Company and China Huaneng Group on 15th November 2002, and the transaction contemplated therein is hereby approved and confirmed.”

By Order of the Board Huang Long Company Secretary

16th November 2002

Registered address of the Company:

West Wing, Building C, Tianyin Mansion, 2C Fuxingmennan Street, Xicheng District, Beijing 100031, The People’s Republic of China

Notes:

1. Eligibility for attending the Extraordinary General Meeting

Holders of the Company’s foreign Shares whose names appear on the HK$ Dividend foreign Shares Register and/or the US$ Dividend foreign Shares Register maintained by Hong Kong Registrars Limited and holders of domestic shares whose names appear on the domestic shares register maintained by the Company at the close of business on 6th December 2002 are eligible to attend the Extraordinary General Meeting.

Huaneng Power International, Inc.

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NOTICE OF EXTRAORDINARY GENERAL MEETING

2. Proxy

• (i) A member eligible to attend and vote at the Extraordinary General Meeting is entitled to appoint, in written form, one or more proxies to attend and vote on behalf of him. A proxy needs not be a shareholder.

• (ii) A proxy should be appointed by a written instrument signed by the appointor or its attorney duly authorised in writing. If the form of proxy is signed by the attorney of the appointor, the power of attorney authorising that attorney to sign or other authorisation document(s) shall be notarised.

• (iii) To be valid, the power of attorney or other authorisation document(s) which have been notarised together with the completed form of proxy must be delivered, in the case of holders of domestic shares, to the Company and, in the case of holders of foreign Shares, to Hong Kong Registrars Limited, not less than 24 hours before the time designated for holding of the Extraordinary General Meeting.

• (iv) A proxy may exercise the right to vote by a show of hands or by poll. However, if more than one proxy is appointed by a shareholder, such proxies shall only exercise the right to vote by poll.

• Registration procedures for attending the Extraordinary General Meeting

• (i) A shareholder or his proxy shall produce proof of identity when attending the meeting. If a shareholder is a legal person, its legal representative or other persons authorised by the board of directors or other governing body of such shareholder may attend the Extraordinary General Meeting by producing a copy of the resolution of the board of directors or other governing body of such shareholder appointing such persons to attend the meeting.

• (ii) Holders of foreign Shares and domestic shares intending to attend the Extraordinary General Meeting should return the reply slip for attending the Extraordinary General Meeting to the Company on or before 11th December 2002.

• (iii) Shareholders may send the above reply slip to the Company in person, by post or by fax (Attn: The Secretary office of the Board).

• Closure of Register of Members

The register of members of the Company will be closed from 1st December 2002 to 30th December 2002 (both days inclusive).

Huaneng Power International, Inc.

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NOTICE OF EXTRAORDINARY GENERAL MEETING

5. Other Businesses

• (i) The Extraordinary General Meeting will not last for more than half day. Shareholders who attend shall bear their own travelling and accommodation expenses.

• (ii) The address of the share registrar for Foreign Shares of the Company, Hong Kong Registrars Limited is at:

1901-5

19/F., Hopewell Centre 183 Queen’s Road East, Hong Kong

• (iii) The registered address of the Company is at:

West Wing, Building C, Tianyin Mansion, 2C Fuxingmennan Street, Xicheng District, Beijing 100031, The People’s Republic of China

Telephone No.: (+86)-10-66491999 Facsimile No.: (+86)-10-66491860

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Huaneng Power International, Inc.